European Indexes End Lower

A roundup of Monday's action on major European exchanges


The FTSE 100 closed in the red but off intra-day lows following an in-line US ISM manufacturing data. Wall Street was lower on negative newsflow among financials and Boeing losing a multi-billion dollar USAF contract. WTI climbed to US$103.27/bbl. Among big ticket earnings, HSBC (+3.66%) unveiled an in-line FY PTP of US$24.21bn, up 10%. Impairment charges at the global bank jumped to US$17.242bn. XSTRATA (+0.88%) said FY attributable profit rose 13% to US$5.543bn - below estimates. Added talks with Vale are ongoing. FT publisher PEARSON (-2.55%) reported a forecast-beating FY adjusted PTP and EPS figures, saying it has made good start to 2008 and expects further financial progress. TAYLOR NELSON (-2.55%) reported a 6.3% rise in FY revenue to GBP1.067bn, with adjusted PTP rising 9.1% to GBP92.2m. Insurer HISCOX (-2.91%) posted an 18% rise in FY07 PTP. GAME GROUP (+2.55%) said it expects FY group PTP before non-recurring costs to be not less than GBP74m, just ahead of the previous GBP73m. Away from the results, BARCLAYS (-3.35%) is to acquire Russian bank Expobank from Petropavlovsk Finance for GBP373m. In broker action, Merrill added DIAGEO (-0.19%) to Most Preferred List, reiterated buy and raised target to GBP11.40 from GBP11. JP Morgan upgraded PRUDENTIAL (-1.64%) to neutral from underweight and raised the target to GBP7.05 from GBP6.30 citing recent sell-off.


The CAC 40 (-1.0%) ended in the red but off lows. Wall Street was trading lower after mortgage lender Countrywide said it may see further credit losses, but an in-line ISM manufacturing index limited losses. Among the gainers, the US Air Force unexpectedly picked EADS's (+9.24%) Airbus A330 over Boeing's 767 for an airborne refueling contract valued at as much as US$35bn. PEUGEOT (+3.62%) revved up as WestLB upgraded to add from hold, while French new car sales data showed PSA Peugeot Citroen new car registrations up 12.5% in February. AIR FRANCE-KLM (-2.57%) reportedly aims to make a binding offer for Alitalia's flight operations but only a part of its 49% affiliate AZ Servizi activities. L'OREAL (-1.7%) may buy 25% of Giorgio Armani, according to Milano Finanza. PPR (-0.65%) won't sell the Fnac chain, Le Journal des Finances reports, quoting CEO Francois-Henri Pinault. Belgium investor Albert Frere told Le Journal des Finances he may increase his stakes in LAFARGE (-1.48%) and in mineral producer IMERYS (-2.0%). VIVENDI's (+0.38%) CEO Jean-Bernard Levy told La Tribune that Vivendi is willing to study potential acquisitions in Africa. NICOX (-10.84%) reported FY07 revenues of EUR 20.62m vs. EUR 9.63m in 2006; net loss of EUR 32.144m vs. EUR 24.696m in 2006.


Xetra-Dax (-0.86%) finished the day firmly in the red. Wall Street was also trading lower after an in-line ISM manufacturing survey was offset by negative newsflow among US financials. In German macro news, manufacturing PMI for Feb reached 54.3% vs a Reuters consensus of 54%. Locally, MAN (+4.31%) rose as Investor AB and the Wallenberg Foundation said they would divest their holdings in Scania to VW (+1.57%) for SEK200/share. The transaction means VW will increase its voting right to 68.6% in Scania, which fueled takeover speculation around MAN. In the wider market, EADS' (+8.94%) outperformed as the US Air Force picked Airbus A330 over Boeing's 767 for an airborne refueling contract valued as high as US$35bn. Reuters quoted the head of BAYER's (-1.28%) Asia Pacific unit as saying that it could see high double digit sales growth in the region, with China expected to be the main driver. This could add 9% to the company's sales. In earnings, FRAPORT (+1.26%) reported FY07 results in line with expectations with net profit of EUR 213.7m. For 2008, expected passenger growth at Frankfurt Airport to reach 1%-2%, while net profit and revenue are expected to be lower y/y. FREENET (-2.59%) posted FY07 PTP at EUR 163.7m and said its DSL subscribers reached 1.28m. On the broker front, Goldman downgraded CONERGY (+1.46%) to neutral and JP Morgan upgraded DEUTSCHE TELEKOM (-0.88%) to neutral.


Spanish equities ended sharply lower with banks weighing after a downbeat note on the Spanish banking sector from Deutsche Bank. Financials took a further hit from news in the US, where mortgage lender Countrywide said it could see more credit losses. Locally, decisions from COLONIAL (-5.38%) shareholders and financing banks regarding the bid from ICD should be known today. UBS thinks an agreement is highly probable. Earnings were in focus as the FY07 results season came to an end. SACYR-VALLEHERMOSO (-6.93%) reported numbers slightly ahead of consensus estimates, but said it sees sales growth slowing in 2008 to 5-10% y/y. REE (-1.47%) posted EBITDA up 11% to EUR 723.25m, in line with forecasts. CAMPOFRIO (-2.03%) unveiled net profit up 7%. FAES FARMA (-2.09%) said net profit fell 3.0% to EUR 22.091m. In other news, BME (-3.22) said stock trading volumes in February fell 11.6% y/y to EUR 105.2m. Ram Bhavnani will not make any decision on future investment for three months, according to Europa Press citing sources close to the Indian investor. BANCO POPULAR's (-1.73%) shares gained last week amid rumours of Bhavnani buying a stake. TELECINCO (-1.13%) achieved average audience share of 19.2% in February, vs ANTENA 3 (-3.5%) with 16.8% and Cuatro with 8.6%.


The SLI (-1.98%) closed the first session of the week sharply lower as Wall Street traded in the red. An in-line ISM manufacturing data was offset by bearish news in the US financial sector. US construction spending fell 1.7% in January. Of local note, UBS (-3.32%) said that the government of Singapore controls 9.54% of the bank's shares through its investment vehicle GIC. Meanwhile, Credit Suisse cut UBS's target price to CHF57 from CHF67, saying further writedowns appear likely and could be large. JULIUS BAER (-4.76%) lost a bid to permanently disable a website that allegedly posted leaked customer and banking records on the internet. LOGITECH's (-1.93%) CEO Gerald Quindlen told newspaper SonntagsZeitung that the group is ready to make 'larger acquisitions' of up to US$100m. Note that insurers were in focus in Europe after Warren Buffett warned in a letter to Berkshire Hathaway shareholders that there are tougher times ahead: ZURICH FINANCIAL (-2.74%). In further broker moves, UBS raised SWISS RE's (-3.51%) target price to CHF86 from CHF80, while Goldman Sachs lifted HOLCIM's (-0.75%) target price to CHF113 from CHF112.70. ADECCO (-1.91%) was eyed ahead of FY07 results tomorrow.

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